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Justice Department Suffers Another FCPA Setback

January 18, 2012
For the 3rd time in the last 2 months, a federal judge has tossed out alleged violations of the FCPA, a 34-year-old law that prohibits bribes to foreign officials to win business.  On Monday, U.S. District Judge Lynn Hughes of Houston exonerated a former manager of Swiss Engineering Company ABB Ltd. who was accused by the Department of Justice of violating the Foreign Corrupt Practices Act. Case of Defendant O'Shea. Thus, defendant John O’Shea’s was granted his motion to have 12 counts of FCPA violations and one count of conspiracy against him dismissed.  He was arrested in November 2009 and charged by prosecutors with violating the FCPA by allegedly funneling bribes through an intermediary to officials at a Mexican state-owned utility to win contracts on behalf of ABB’s Houston subsidiary.  His trial began last week in U.S. District Court in Houston. Judge Hughes dismissed the charges after the government had closed its case, declining to send the charges to the jury for a verdict.  Hughes reportedly said he didn’t believe the government’s chief witness, the alleged intermediary, who is awaiting sentencing on conspiracy charges, could tie O’Shea to the alleged crimes. Latest Setback for DOJ. The acquittal hands, yet another setback to the DOJ's foreign corruption team.   In December, a federal judge in Washington, D.C., dismissed charges of conspiring to violate the FCPA against 6 defendants, exonerating one of them entirely. Earlier in December, a federal judge in Los Angeles threw out the landmark FCPA conviction of Lindsey Manufacturing Co., the first company convicted under the law.  The Judge's written opinion offered a scathing assessment of the Justice Department’s handling of the case. A Justice Department spokeswoman declined to comment. Lawyers for O’Shea didn’t immediately respond to requests for comment. In a related settlement, ABB pleaded guilty to FCPA violations in 2010 and paid more than $58 million in civil and criminal penalties. O’Shea still faces four counts of international money laundering and one count of falsifying records. Hughes carved out the FCPA counts from the government’s case in October 2010, meaning O’Shea could face a second trial on the other charges. [WSJ Law Blog, 1/17/12]